Collection: Charlie Munger - #230 'Know The Edge Of Your Own Competency'



[Transcript]

TOM TOMBRELLO 00:00

I remember reading Jim Collins best seller on business stressing that leaders in business should have humility.


Frank Wells at Disney always said humility is the essence of life. Even President Suharto among his three maxims, one was don't be arrogant. But if two people have a right to a call on infallibility, it's Charlie and Warren. So I guess the first question is, do you two managed to keep each other from becoming infallible?


CHARLIE MUNGER 00:43

Well, we have a lot of fun together and our work is, we're not really work for that reason. And yes, we take each other down a little bit and promptly, but we do it in a –


TOM TOMBRELLO 01:00

Collegial.


CHARLIE MUNGER 01:01

– collegial fashion. We've never had a serious argument in all these years. And of course, it's like an old married couple after a while, you know, one ground and two twitches and you've conveyed your whole – (Laughter) – conclusion on the subject and that's the way it works. (Laughter)


And in terms of humility, I've frequently said that when they passed that out and I didn't get my full share. (Laughter) And that was a serious problem when I was young and I only cured it partly by becoming very rich – (Laughter) – and generous, it takes both to overcome a defect like that. So the young people in the room, don't copy this if you're not willing to pay the price. (Laughter)


TOM TOMBRELLO 01:59

Well –


CHARLIE MUNGER 02:00

And I don't – But if humility means that you know the edge of your own competency –


TOM TOMBRELLO 02:05

Yes.


CHARLIE MUNGER 02:05

– and you aren't arrogantly stepping over the boundary, I'm very good at that, but within my area of competency my best friend would not adore me for my humility. (Laughter)


TOM TOMBRELLO 02:19

Yeah well, I'd redefined humility is knowing what you don't know.


CHARLIE MUNGER 02:24

Yes, well, both Warren and I are very good at that.


One of these guys at the Berkshire meeting from one of the foreign publications said, "why a couple of guys in a little place in Omaha, do so much better than all these powerful minds and great institutions?"


And I said, "well, I think Warren and I know the edge of our competency better than other people do."


And that's humility in the umbrella sense and that is a very important thing to know. I say over, and over again, it's not a competency, if you don't know the edge of it. You were a disaster if you don't know the edge of your own competency.


Warren frequently says, I'd rather deal with the guy with an IQ of 130 who thinks it's 125 than a guy with an IQ of 180 who thinks it's 200. (Laughter) That second guy will kill you. (Laughter) And so it is very important to know the edge of your own competency.


(Source: https://youtu.be/S9HgIGzOENA)

 

[YAPSS Takeaway]

"It's not a competency, if you don't know the edge of it." ~Charlie Munger